Universal already has a deal in place with Microsoft which gives the Music company a nominal royalty fee for every Zune player that Microsoft sells.

Record labels have been claiming that iPods and other MP3 players all over the world are jam-packed with illegal and downloaded music, which is why they want a slice of iPod sales. The next round of negotiations with Apple is due to begin in February 2007.

"It would be a nice idea. We have a negotiation coming up not too far. I don't see why we wouldn't do that... but maybe not in the same way," Morris told the Reuters Media Summit. James Rivington